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Investment market update

Early Trading

UK stocks are expected to open lower after a mixed Asian session as investors give a cautious response to the Federal Reserve leaving interest rates at record lows.

World Markets

Trading in Asian markets was mixed, taking their cue from Wall Street where shares closed down after the Federal Reserve kept interest rates unchanged.

US stocks ended lower after the Federal Reserve decision indicating that global risks overshadowed signs of strength in the US, where inflation remains stubbornly slow. Stocks most sensitive to interest rates had the largest moves, with utilities and real-estate companies advancing more than 0.9% while banks lost 1.3%.

UK stocks fell, snapping two days of gains, as anxious investors awaited the outcome of the US Federal Reserve’s interest rate-setting meeting. Smiths Group Plc fell 4.2%, posting the biggest decline in the FTSE, after peer Rotork Plc forecast full-year sales that were below analysts’ estimates.

Headlines

The Federal Reserve held interest rates at historic lows as concerns about an increasingly brittle global economy overshadowed evidence of a resilient US recovery. The US central bank maintained its 0 to 0.25% target range for the federal funds rate, ending weeks of speculation over whether it would raise rates for the first time since before the financial crisis. Janet Yellen, the Fed chair, warned that developments in the global economy and markets, which have been rattled by China’s slowdown, may “restrain US economic activity somewhat” as well as pushing down inflation — adding that the Fed was watching for risks of an unexpectedly “abrupt” slowdown in the People’s Republic.

More than a year after a sales-tax increase tipped Japan into a recession, efforts to clamp down on soaring pension payments are suppressing a recovery in consumer spending. The problem highlights how difficult it has been for Prime Minister Shinzo Abe to generate a sustained economic rebound for an economy with an aging and shrinking population.

Luxury homes in London are proving the toughest sell since the global financial crisis as higher taxes continue to dampen demand.

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